Middle income class hit hard by rise in inflation

Traders display their merchandise on Namirembe Road in Kampala yesterday. The prices of goods has increased, causing inflation. PHOTO/ ABUBAKER LUBOWA

BY MARTIN LUTHER OKETCH
T he middle income class in Kampala, Jinja and Masaka has registered the highest levels of inflation in the past one year, the Uganda Bureau of Statistics (Ubos) has said.

Since the lockdown was eased, Uganda’s inflation rate has been rising although in some cases, it decreased in a marginal range.

Ubos said on Monday that analysis by geographical areas and income groups revealed that Kampala’s middle-income class registered the highest annual inflation of 5.5 per cent for the year ending August up from 4.8 per cent registered for the year ended July.

“This was driven by annual transport inflation that was registered at 38.9 per cent for the year ending August from 34.4 per cent registered for the year ended July 2020. In addition, food and non-alcoholic beverages inflation increased to 1.4 per cent for the year ending August 2020 from a minus 0.3 per cent registered for the year ended July 2020,” Ms Aliziki Kaudha Lubega, the director of macroeconomic statistics at Ubos, said.

The measurement and the period covers 12 months and it ranges from August 2019 to August 2020. (For the case of July, it means it was calculated in the period ranging from July 2019 to July 2020).

Ms Aliziki said the transport division comprises the purchase of vehicles, operation of transport and personal equipment and transport services.

Of these items ,she said transport costs contributed to higher inflation in the transport division because of the fares that have more than doubled since lifting lockdown on public transport.

Ms Aliziki said the second highest inflation was registered in both Jinja and Masaka centres at 5.4 per cent for Jinja for the year ending August 2020 compared to 5.6, for Masaka was 5.2 compared to 5.4 in the previous year.

On where Uganda’s overall inflation rates stand, Ms Aliziki said the country’s current annual headline inflation rate for the year ending August 2020 declined to 4.6 per cent compared to 4.7 per cent registered for the year ended July 2020.

The annual headline inflation is the total inflation for the period comprising a basket of the commodities in consumer priceindex.

Ms Aliziki said the decrease in annual headline inflation is mainly attributed to the annual Energy Fuel and Utilities (EFU) inflation that declined to 3.4 per cent for the year ending August compared to 6.6 per cent recorded for the year ended July.

“The decrease in EFU is mainly due to solid fuels inflation that declined to 13.4 per cent for the years ending August 2020 compared to the 20.6 per cent recorded for the year ended July 2020, specially, the annual inflation for charcoal declined to 13.6 per cent for the year ending August 2020 compared to the 20.9 per cent recorded for the year ended July 2020,” she said.

In addition, annual inflation of firewood decreased to 9.9 per cent for the year ending August compared to 14.2 per cent recorded for the year ended July 2020.

However, the annual inflation for liquid energy fuels increased to minus 3.7 per cent for the year ending August 2020 compared to minus 4.4 per cent recorded for the year ended July 2020.

This development means that the prices of items that fall under EFU decreased during the period under review.
Bank of Uganda uses the annual core inflation to control the country’s inflation rate at 5 per cent.

Ms Aliziki said the annual core inflation for Uganda increased to 5.9 per cent for the year ending August 2020 from 5.8 per cent registered in July 2020.

The core inflation rate is the price change of goods and services and it excludes food, energy and metred water.